Sunday, March 15, 2009

Health Care in the U.S. versus Single-Payer Systems in Europe and Canada

Since one of President Obama's three main policy priorities is reforming health care, and since progressive pundits often make invidious comparisons between health care in the U.S. and the single-payer health care systems of Europe and Canada, it's worth revisiting an Investor's Business Dailyop/ed on this topic written by former Canadian physician Dr. David Gratzer in 2007. Below is an excerpt:

One often-heard argument, voiced by the New York Times' Paul Krugman and others, is that America lags behind other countries in crude health outcomes. But such outcomes reflect a mosaic of factors, such as diet, lifestyle, drug use and cultural values. It pains me as a doctor to say this, but health care is just one factor in health.

Americans live 75.3 years on average, fewer than Canadians (77.3) or the French (76.6) or the citizens of any Western European nation save Portugal. Health care influences life expectancy, of course. But a life can end because of a murder, a fall or a car accident. Such factors aren't academic — homicide rates in the U.S. are much higher than in other countries.

In The Business of Health, Robert Ohsfeldt and John Schneider factor out intentional and unintentional injuries from life-expectancy statistics and find that Americans who don't die in car crashes or homicides outlive people in any other Western country.

And if we measure a health care system by how well it serves its sick citizens, American medicine excels. Five-year cancer survival rates bear this out. For leukemia, the American survival rate is almost 50%; the European rate is just 35%. Esophageal carcinoma: 12% in the U.S., 6% in Europe. The survival rate for prostate cancer is 81.2% here, yet 61.7% in France and down to 44.3% in England — a striking variation.

Like many critics of American health care, though, Krugman argues that the costs are just too high: health care spending in Canada and Britain, he notes, is a small fraction of what Americans pay. Again, the picture isn't quite as clear as he suggests. Because the U.S. is so much wealthier than other countries, it isn't unreasonable for it to spend more on health care. Take America's high spending on research and development. M.D. Anderson in Texas, a prominent cancer center, spends more on research than Canada does.

Dr. Gratzer doesn't make this point explicitly, but it's also true that patients in other countries benefit from the research and development financed by the American health care system. It's worth reading the rest of his column.

"All other countries benefit from the R&D spending that US drug companies put out."

That's true, and I had the drug companies' R&D spending in mind when I used the more inclusive phrase "the research and development financed by the American health care system". Patients in foreign countries also benefit from the health care R&D conducted by American universities, hospitals, medical device companies, the NIH, the military, etc.

I completely agree with Ayn Rand. In addition, a few more points on the comparisons with single-payer countries:

- the US is much more of a melting pot than many of the countries of Europe - the life expectancy as a whole is swayed much more by the varying ethnic & country origins of the people.

- while single-payer systems allow the government to control the costs by restricting access, technologies & drug advancements, our system has the opposite problem where each state has a long list of items that must be covered by insurance (mandates), which drives up the costs and precludes nationwide insurance competition as each state has its own set of requirements

- a high percentage of the costs associated with our Health Care system are not paid directly by those that consume healthcare but are paid through 3rd party payers - insurance & the government. This leads to multiple negative results: 1) the market mechanism for the control of costs and the improvement of quality is severely constrained as people don't see a direct correlation between their healthcare spending and their usage of healthcare resources. 2) as opposed to the single-payer system, the government is not constraining the system costs to the same degree by restraining spending on technology, new drugs, etc.

It is very clear to me that the only way to control our costs while maintaining the best system in the world is by forcing people to pay directly for their healthcare through tax credits or some other tax-benefited method. If people are forced to shop on quality and, except in the case of catastrophic health issues, spend their own money, market forces will be brought to bear, competition will increase and costs will begin to stabilize.

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